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STEPHEN PUDLES STOCK OPTION AGREEMENT

Option Agreement

STEPHEN PUDLES STOCK OPTION AGREEMENT | Document Parties: API NANOTRONICS CORP. You are currently viewing:
This Option Agreement involves

API NANOTRONICS CORP.

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Title: STEPHEN PUDLES STOCK OPTION AGREEMENT
Governing Law: Delaware     Date: 8/25/2008
Industry: Semiconductors     Sector: Technology

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Exhibit 10.27

STEPHEN PUDLES

STOCK OPTION AGREEMENT

API NANOTRONICS CORP.

2006 EQUITY INCENTIVE PLAN

THIS AGREEMENT is dated and made effective as of April 22, 2008 (“ Effective Date ”) by and between API NANOTRONICS CORP., a Delaware corporation (the “ Company ”), and Stephen Pudles (“ Optionee ”).

WITNESSETH:

WHEREAS, Optionee became an employee of the Company on the date hereof; and

WHEREAS, the employment agreement (the “ Employment Agreement ”) dated March 3, 2008 between the Company and the Optionee requires that the Company grant him the options set forth herein as soon as practicable;

WHEREAS, the Company desires to grant stock options to Optionee on the Effective Date to purchase shares of the Company’s Common Stock pursuant to the Company’s 2006 Equity Incentive Plan, as amended (the “ Plan ”); and

WHEREAS, the Board of Directors of the Company and its Compensation Committee has authorized the grant of stock options to Optionee and has determined that the Fair Market Value of Common Stock of the Company on the Effective Date shall be the exercise price per share provided below.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows:

1. Grant of Option . The Company hereby grants to Optionee as of the Effective Date the right and option (the “ Incentive Option ”) to purchase up to 11,236,650 shares of Common Stock (“ Time Based Shares ”) and the right and option (the “ Nonqualified Option ” and collectively with the Incentive Option, the “ Option ”) to purchase up to 7,491,100 shares of Common Stock (the “ Performance Shares ” and collectively, with the Time Based Shares, the “ Shares ”) at an exercise price of $0.0925 per Share on the terms and conditions set forth herein and subject to the terms and conditions of the Plan. The Incentive Option is intended to qualify as an “incentive stock option” within the meaning of Section 422, or any successor provision, of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the regulations thereunder subject to the limitations set forth in Section 9(b) of the Plan. The Nonqualified Option is not intended to qualify as an “incentive stock option” under Section 422 of the Code.

All capitalized terms not defined in this Agreement shall have the meaning set forth in the Plan.


2. Duration and Exercisability .

a. Vesting/Exercise Period of Incentive Option . The Incentive Option shall become exercisable as to portions of the Time Based Shares as follows: (i) the Incentive Option shall not be exercisable with respect to any of the Time Based Shares until the first anniversary of the Effective Date; (ii) on such first anniversary of the Effective Date the Incentive Option shall become exercisable as to thirty-three and one-third percent (33-1/3%) of the Time Based Shares; (iii) on the second anniversary of the Effective Date, the Incentive Option shall become exercisable as to an additional thirty-three and one-third percent (33-1/3%) of the Time Based Shares; and (iv) on the third anniversary of the Effective Date, the Incentive Option shall become exercisable as to an additional thirty-three and one-third percent (33-1/3%) of the Time Based Shares; subject to the Optionee’s continuous employment with the Company through the vesting date. The Time Based Shares that may be treated as subject to purchase pursuant to an “incentive stock option” within the meaning of Section 422 of the Code in any given year shall be limited to conform to the $100,000 limit set forth at Section 9.1(b) of the Plan and Section 422 of the Code.

b. Vesting/Exercise Period of Nonqualified Option . The Nonqualified Option with respect to the Performance Shares will vest in three equal annual installments tied to the next three fiscal year ends of the Company as specified below but only if the specified performance targets for the applicable fiscal year are achieved. Such performance targets shall be based upon EBITDA targets and other performance targets (collectively, the “ Performance Targets ”) determined by the Board in consultation with Optionee. The Performance Targets for the Nonqualified Option with respect to (i) the first one-third (1/3) of the Performance Shares shall be determined within 120 days of March 3, 2008, (ii) the second one-third (1/3) of the Performance Shares shall be determined no later than 30 days prior to the Company’s May 2009 fiscal year end and (iii) the third and final one-third (1/3) of the Performance Shares shall be determined no later than 30 days prior to the Company’s May 2010 fiscal year end. The Performance Shares will vest in three equal annual installments 60 days after the end of each of the first three fiscal years, starting with the fiscal year commencing June 1, 2008, subject to (i) achievement of the Performance Targets for the applicable fiscal year and (ii) Optionee’s continuous employment with the Company through the vesting date.

c. Change of Control . If a Change in Control occurs during the term of Optionee’s employment with the Company, the Option, to the extent that it has not already become exercisable, will immediately become exercisable with respect to 50% of the Time Based Shares and 50% of the Performance Shares with respect to which the Option is not then exercisable.

d. Expiration . The Option shall expire on the tenth anniversary of the Effective Date (“ Expiration Date ”) and must be exercised, if at all, on or before the earlier of the Expiration Date and any date on which the Option terminates in accordance with the provisions of Section 3.

 

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e. Lapse Upon Expiration . To the extent that this Option is not exercised prior to the applicable expiration date set forth in Section 2(d) or Section 3 of this Agreement, all rights of Optionee under this Option shall thereupon be forfeited.

3. Termination .

a. Termination for Any Reason Other than Death or Disability . If Optionee is Terminated for any reason other than his death or Disability (as such term is hereafter defined), this Option shall be exercisable only to the extent the Option was exercisable on the date of Termination, but had not previously been exercised, and shall expire on the earlier of (i) the close of business three months after the Termination Date (as hereafter defined) and (ii) the Expiration Date. Notwithstanding the foregoing, if the Optionee is terminated for Cause, then the Option shall terminate immediately on the Optionee’s Termination Date.

b. Termination Because of Death or Disability . If Optionee is Terminated because of his death or his Disability (or Optionee dies within three (3) months after a Termination other than because of his Disability or because of the existence of Cause), then this Option shall be exercisable by Optionee, or the person or persons to whom Optionee’s rights under this Option shall have passed by Optionee’s will or by the laws of descent and distribution, only to the extent the Option was exercisable on the date of Optionee’s Termination, but had not previously been exercised, and shall expire on the earlier of: (i) the close of business six months after Optionee’s Termination Date and (ii) the Expiration Date.

c. Change of Control . In the case of a Change of Control, the terms of the Option may be modified by the Committee as provided in the Plan.

d. Definitions .


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